KNOW WHAT IS FOREIGN CONTRIBUTION AND FOREIGN SOURCE UNDER FCRA

Описание: Decoding various provisions and definitions under the FCRA has always been difficult for a lay person to understand as not all are so well versed with the legal language used in the Statute. We used to receive a number of queries asking whether this fund shall be FCRA or local, whether the donation from such and such organization will be FCRA donation or local. So, here I am from Team NGOenabler to develop certain clarity on two of the key definitions, which are the core of FCRA, that you need to not only remember but also understand, if you already run a FCRA registered organization or thinking of being registering one, in the near future.
So, the very first important definition which I will discuss today is the heart of FCRA – the definition of foreign contribution itself. As per Section 2(h) of the Act, foreign contribution means any donation, delivery or transfer (so all the possible modes of giving have been covered here) made by a foreign source (the definition of which we will discuss later):

a) Of any article – which implies even the donation in kind is covered by the definition, not being an article given to a person as a gift for his personal use, which means if such article is received for personal consumption, it shall not be considered as foreign contribution, if the market value, in India, of such article, on the date of such gift, is not more than such sum as may be specified from time to time, by the Central Government by the rules made by it in this behalf. Presently, the amount allowed for such gift stands at not more than Rs. 1 Lac. So, all in all, donation in kind is covered by the definition of foreign contribution but not the one which is for personal use and that too, only upto the value of Rs. 1 Lac [notified in Foreign Contribution Regulation (Second Amendment) Rules, 2019].

b) Of any currency, whether Indian or foreign, which implies even if contribution in Indian currency is received from any foreign source, it will be covered by the definition and lastly,


c) Of any security as defined in the relevant section of Securities (Contract) Regulation Act, which actually includes shares, scrips, bonds, debentures or other marketable securities of any incorporated body or body corporate.

Explanation 1 says a donation, delivery or transfer of any article, currency or security referred to in this clause by any person who has received it from any foreign source, either directly or through one or more persons, shall also be deemed to be foreign contribution within the meaning of this clause. This implies even if you are second recipient of such article or currency or security, it shall be still be considered as foreign contribution.

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